Chevron agrees to pay $4.5 million for oil spills

SALT LAKE CITY — City leaders, Chevron and state water quality regulators are proposing a settlement agreement over a pair of 2010 oil spills in which the pipeline company would pay out $4.5 million.

Details of the agreement were unveiled Tuesday at city offices, where Chevron agreed to pay:

• $1 million to Salt Lake City to settle “lost use” claims, which include environmental and social impacts.

• $500,000 to the state of Utah as a civil penalty arising from the two crude oil spills.

• $3 million in lieu of a civil penalty for mitigation projects to restore and enhance affected waterways that may have been impacted by the two crude oil spills.

Those financial obligations would be beyond what Chevron has already paid since the spills, such as reimbursement of damages suffered by residents or its own expenses in hiring private contractors to facilitate cleanup of the spill.

Some critics say the settlement agreement does not go far enough and fails to address paying for the monitoring of any long-term health impacts to residents who live closest to the spill sites.

"This proposed settlement appears to ignore the health impacts to the community and is totally unacceptable," said Dr. Brian Moench, president of Utah Physicians for a Healthy Environment. He said the settlement dismisses the possible long-term medical consequences to residents exposed to the spill's aftermath.

But Salt Lake Mayor Ralph Becker said the settlement agreement should not be viewed as closing the door on Chevron's obligations and nothing in the document precludes action or claims on the part of other agencies, such as the state health department or Salt Lake Valley Health Department.

He added the agreement only goes to the narrow scope of the direct city impacts and includes holding Chevron responsible for any future cleanup costs identified.

The public will be able to comment on the state's portion of the settlement for 30 days by submitting input to wbaker@utah.gov. The state also plans to have an official comment forum available at its website, www.waterquality.utah.gov, in which the public will have 90 days to suggest mitigation projects along the waterways.

On June 12, 2010, a lightning-caused rupture in Chevron's 10-inch diameter pipeline above Red Creek went undetected for 10 hours, leading to the release of 33,600 gallons of crude oil into Red Butte Creek. Some of the oil also made it into the Jordan River and closed down the pond at Liberty Park.

Chevron was fined nearly $500,000 in that incident, which was followed by a smaller oil spill less than six months later in the same vicinity above Red Butte Garden at the University of Utah.

Although less severe because most of the oil was contained in a vault, the second incident renewed fears about the company's ability to maintain the integrity of the pipeline. Becker at the time called for an immediate shutdown of the pipeline, which conveys oil from Rangely, Colo., to the company's refinery in Salt Lake City.

The city says it had $508,000 in direct, out-of-pocket expenses in its response to and ongoing cleanup of the spills, involving the effort of multiple departments such as public works' employees, police and firefighter responses.

Those expenses are among those reimbursed, as well as a variety of restorative projects designed to restore the creek, adjacent neighborhoods and other areas to pre-spill conditions.

As part of the mitigation components agreed to in the settlement, Chevron will pay for a fish restocking program in a three-mile stretch of Red Butte Creek, which will involve restocking 3,000 Bonneville cutthroat trout into the waterway. In addition, a waterfowl mitigation project will be funded at $100,000.

While major cleanup of the spills is done, Chevron, Salt Lake City, the Utah Department of Environmental Quality and the Salt Lake Valley Health Department are continuing to assess conditions. If any "hot spots" are found, the city said Chevron will continue to bear responsibility for those cleanup costs.

“After substantial negotiations between the three parties, we feel this is a fair and reasonable settlement and that the mitigation projects will preserve and protect Utah’s waterways,” said Utah Division of Water Quality Director Walt Baker.

Becker said the settlement should help satisfy any remaining concerns by residents about the restoration of the stream and river.

“Salt Lake City’s position has remained constant since the date of the first spill: to hold Chevron accountable for damage to the health of our city’s residents and natural environment,” Becker said.

“I am hopeful that as the requirements of the settlement and agencies are met and the assessment of the affected areas is complete, the concerns of our residents will be satisfied and the repair and restoration of the damaged riparian corridors will be accomplished.”

Becker said recent monitoring of the creek did not reveal any locations meriting additional cleanup, but the creek and river's status will continue to be monitored.

Even so, Becker said there comes a point at which too much cleanup is simply too much — and will do more damage.

"It could have adverse effects."

The agreement shows that as of July 31, Chevron has paid out nearly $27 million in remediation expenses directly associated with the oil spills and has paid $929,000 to third-parties, such as residents, to compensate damages.

Chevron will also pay $1.3 million to the University of Utah to cover any additional costs for cleanup.

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Written by Amy Joi O'Donoghue with contributions from John Hollenhorst.

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